How Goldman Sachs Made A Fortune In The First Quarter

There were a few sectors where the bank really hit it out of the park.

Keep in mind that Wall Street is still trying to figure out how exactly it's going to make money in a post- financial crisis world.

Sectors that used to be big money makers have been culled for a variety of regulatory and market factors (think: fixed income).

If Goldman can figure out how to make money, obviously there's money to be made. And if there's a way the industry is going, Goldman is probably leading it. This is important stuff to watch if you care about the future of banking.

In Q1 Goldman experienced the most impressive jump in revenue in debt and equity underwriting. Those two businesses experienced a 69% and 53% jump in revenue year over year, respectively. Total debt underwriting was up 63%.

A lot of that is likely in junk bonds. Investors are looking for yield, and companies with low credit ratings have a huge incentive to borrow since rates are low for them.

Back in February Bloomberg reported that major banks had already underwritten $89.6 billion of high-yield debt, which was up 36% from the same time in 2012.

The fees in underwriting junk bonds, by the way, are about 3 times as lucrative as those for underwriting lower yield, higher credit bonds.

Goldman made even more money in incentive fees, or rather, performance fees for their managers. Revenue there was up 141% year over year, jumping from $58 million to $140 million.

Another interesting thing to note is that Goldman was up 24% year-over-year and up 40% for the quarter in its equity investments, excluding its stake in the Industrial and Commercial Bank of China (ICBC). The bank sold $1 billion in that stake earlier this year while the stock was on a tear (up 50% in 6 months).

Usually, ICBC stock makes up a serious chunk of the bank's equity investing revenue. In the last quarter it made up 42% of all Goldman's $1.12 billion revenue in that sector.

In Q1, however, Goldman upped its revenue in that business significantly without ICBC. ICBC contributed just $24 million (2%) of its $1.12 billion revenue.